Nvidia Corp. (NVDA) is considering ramping up production capacity for its H200 artificial intelligence chips after orders from Chinese clients outpaced what the company can currently produce.
The demand surge follows U.S. President Donald Trump's announcement Tuesday that Washington will permit Nvidia to export H200 processors to China, provided the company pays a 25% fee on each sale.
Chinese appetite for the chips is strong enough that Nvidia is leaning toward adding new capacity, Reuters reported Friday, citing sources familiar with the matter.
Chinese Tech Giants Queue Up
Alibaba Group Holding Limited (BABA) and ByteDance wasted no time reaching out to Nvidia this week to place substantial orders, according to previous Reuters reporting.
There's a catch, though: Beijing hasn't approved any H200 imports yet.
The H200, manufactured by Taiwan Semiconductor Manufacturing Company Ltd. (TSM) on its 4nm process, remains the fastest chip from Nvidia's Hopper generation.
Chinese officials convened emergency meetings Wednesday to assess whether to allow the shipments, sources said.
Analyst Perspective
Bank of America Securities analyst Vivek Arya reaffirmed Nvidia as his top pick following a recent investor meeting.
Arya noted that Nvidia continues to lead AI computing by a full generation, with current Large Language Models still trained on Hopper graphics processing units and Blackwell expected to deliver a 10x to 15x performance jump when it arrives in early 2026.
He pointed out that the next Vera Rubin platform remains on track for late 2026.
Arya emphasized Nvidia's multi-year demand visibility, backed by at least $500 billion in expected sales across 2025 to 2026 for Blackwell, Rubin, and networking products.
Partnerships with OpenAI and Anthropic add potential upside, he said, while highlighting Nvidia's unmatched platform strength spanning from central processing units and GPUs to scale-out systems and Compute Unified Device Architecture (CUDA) software.
Arya acknowledged that China-related uncertainty persists as Nvidia evaluates potential H200 GPU exports under new U.S. rules.
Nvidia became the first company to hit the $4.5 trillion market cap mark in October as AI demand fueled appetite for its GPUs.
NVDA Price Action: Nvidia shares were up 0.39% at $181.63 during premarket trading on Friday.
